A subdivision, US Funding, West Coast Bank and one big mess

Jeff Manning/The OregonianThe Santiam River Place subdivision brought large homes, granite countertops, island kitchens and other McMansion amenities to Lebanon. After the housing bust, mass foreclosures and price reductions of 50 percent or more, the homes are now within reach of more local residents.My co-worker Jeff Manning turned in one heck of a piece for Sunday's paper about a boom-time subdivision in the mid-Willamette Valley. This is not just another overbuilt, overfinished subdivision. Santiam River Place exposes the get-rich-quick dreams of investors, the questionable bets played by some of Oregon's most respected bankers and the high-flying Vancouver mortgage brokerage house that put the deals together.

LEBANON -- The boomtown housing industry descended on this
working-class Willamette Valley town in 2006 and 2007 building an
upscale subdivision that feels like a little piece of prosperous
suburban Portland plopped into an aging timber town.

But far
from thriving, Santiam River Place has become ground zero in Lebanon's
own little housing crash. Here, the get-rich dreams of novice real
estate investors and the misguided optimism of the financial industry
came together in a coupling that was disastrous for both sides.

West
Coast Bancorp of Lake Oswego bankrolled the building of at least 45
upscale homes in Santiam River Place with $15.7 million in construction
loans. It repossessed more than 40 of them when the borrowers defaulted
on the loans.

West Coast has since resold 25 of the properties, most for less than half of the loan amount.

State
authorities are now taking a hard look at the Lebanon fiasco and the
role played by US Funding Group, the defunct Vancouver mortgage
brokerage that steered buyers into the Lebanon deal, most who never
intended to live there. West Coast was tightly allied with US Funding,
originating at least $200 million in loans to customers throughout the
Northwest brought in by the brokerage.